Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/338360 
Year of Publication: 
2026
Series/Report no.: 
CESifo Working Paper No. 12396
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
Abstract: 
We consider welfare impacts of prohibitive tariffs on trading partners. Initially, there is prohibitive tariff by one country and a zero tariff by its trading partner. Thereafter, the trading partner also resorts to prohibitive tariff. We demonstrate how prohibitive tariffs by the trading partners can unambiguously increase welfare for both the countries through international transfer of technology. The critical and novel proposition of the paper is that the country targeted for retaliation with a prohibitive tariff would welcome such a move for welfare reasons.
Subjects: 
prohibitive tariffs
technology transfer
welfare
JEL: 
F02
F12
F13
I24
Document Type: 
Working Paper
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